29th October 2013

Aegon: Market volatility? Uncertain returns?

Clients look for returns, not for reasons behind poor performance. The fact that we are going through a period of instability doesn’t help to rebuild client’s confidence and trust as market volatility continues to cause concern to investors. It’s possible that markets could remain highly volatile for the next few years as the world economy struggles between recession and recovery.

If, in the past, we all believed that the best way to combat volatility was a well-diversified asset allocation strategy, then we had a wake-up call during the financial crisis of 2008 when all asset classes suddenly became highly correlated; moving in the same direction.

“From 21 October, Aegon Secure solutions have been enhanced by the addition of a range of Managed Risk Portfolios, specifically designed to limit the exposure to downside volatility and to protect the capital from the impact of sudden and dramatic falls.”

Colin Bell, Product Director of Unit-Linked Guarantees, Aegon

Each portfolio has a specific target volatility level and a different long term average expected equity exposure to allow for different risk appetites:

BlackRock, the fund manager, seeks to keep the fund volatility close to the target by making daily adjustments to the asset allocation, depending on the market conditions. The equity exposure may change significantly over time because these portfolios aren’t limited to a pre-defined investment mix. When market conditions are more unstable the proportion of less risky assets may be increased. Likewise, if market conditions stabilise the amount of higher risk assets may increase. 

Aegon Secure solutions offer your clients the possibility to lock in their investment growth on an annual basis. In addition Aegon has just launched improved rates across the Unit-Linked Guarantees range which now offer more favourable terms to our clients.

¹Based on BlackRock back-testing data over the last 10 years, a mixed period of investment conditions

Investments, Technical